Now can I get the video clip, with the sound, into Vegas 5 for editing?
Two ways:
1. Name the audio (AC-3) and video (MPEG-2) clips exactly the same (e.g., Birthday.ac3 and Birthday.mpg). If you do this, and if they are in the same directory, DVDA will automatically match them up, and when you import the video, the audio will be attached.
2. If the names are different or if they reside in different directories, then once you have imported the video into the project, double-click on the video icon, and then on the right side of the screen (in the default DVDA 2.0 view), you will see a place where you can specify the audio and video for the clip. The audio field will be blank. Click on the file icon next to that field and navigate to your audio clip.
Vegas doesn't contain an AC3 decoder, so you'll need to use something like BeSweet to convert the AC3 to wave.
You should be able to open the mpg file in Vegas, though it will probably be a sluggish on the editing side (since it needs to be decompressed), and Vegas will recompress the mpg when you render your final product.